It’s fun how people get rich, isn’t it?

The brothers’ intense personal rivalry has loomed large over India’s business scene since 2002, when the death of their father Dhirubhai Ambani, founder of the Reliance Industries group, led to a rift over strategy.

The dispute eventually led to the break-up of Reliance Industries when, in a 2005 peace deal brokered by their mother, Mukesh retained the highly profitable oil and gas business and Anil walked away with telecoms and power.

Both men continued to operate under the Reliance brand, although it was Mukesh whose fortunes prospered. The elder brother is now India’s richest man, with an estimated net worth of $41 billion,

Sure, he started out rich which helps. But the surge in fortune has come from launching free and heavily discounted mobile telecoms services. The same thing which has severely diminished his brother’s fortune.

Who are the people who really benefit from this? Well, sure, he’s a nice stash now, hasn’t he. But what about those hundreds of millions of Indians who have received free and heavily discounted mobile telecoms services? The cumulative gain there is rather larger than his increase in the stash. Very much larger in fact.

Which is why the system works. As William Nordhaus pointed out.

Causes of depopulation

Well, there could be many reasons why a small island off Scotland doesn’t have a viable population. Weather, jobs, just the sheer misery of tiny, tiny, communities.

But this would also be a problem:

critics say Canna’s difficulties are exacerbated by strict property ownership rules on the island.

Although a few crofts are owned by its original inhabitants, incomers are not allowed to own land or build houses on Canna, and tenancy agreements are capped at 20 years.

The National Trust is the absentee landlord, you see?

Don’t think so somehow

The home of the father of modern economics will reopen to visitors in the autumn. Heriot-Watt University is spending £4 million restoring Panmure House in Edinburgh’s Old Town, where Adam Smith spent his final years.

The 17th-century mansion has lain empty for several years, but soon visitors will be greeted by an original copy of An Inquiry into the Nature and Causes of the Wealth of Nations.

Smith’s 1776 work influenced Karl Marx and was reputed to have a permanent place in Margaret Thatcher’s handbag.

It’s a hell of a weight for a book.

Also, as I understand it, it was a volume of Hayek she slammed down and said “That’s what we believe.”

Dear God I’d love this job

Internal Job Opening

Vacancy Notice –
Contractual agent, FG III

This is to inform you that the Greens/EFA group in the European Parliament is looking for a full-time replacement for the position of ECON adviser (fixed-term contractual agent contract, function group III – Contract until 31/12/2019).

Indicative starting date: 1st of February 2018

Agreed, we’d have to be informing the Greens about economics starting with Peter has two apples, John wants one and has some money but still.

So, a question for economic types

It’s well known (umm, OK, not well known but in detail some people know it) that at some point of revenue raising you’ve got to go off and tax the poor. You just can’t squeeze enough out of the richer to pay for a large State.

For example, an American economist (whose name I can never damn recall, which is annoying because he made a significant pledge to my unsuccessful kickstarter to do a book on the subject) keeps pointing out that if the US wants to move to a welfare state of European size it will have to have a VAT – a regressive tax. He also points out that the Swedish et al systems pay for themselves by taxing the poor more, not the rich that much more.

Which leads to a bleg. The information is definitely out there, but has anyone collated it?

We have the distributional impacts of taxation. The top 10% pay y % of all tax (usually we just see income tax, but the calculation for the total tax burden exists for UK and US at least). Top 20% z% and so on.

OK, has that all been collated?

My question being, well, do larger States ever manage to finance themselves by higher tax burdens on the richer? Or is it always done by taxing further down the income levels?

That is, do we have collated somewhere the percentage of GDP raised on the top 1%, top 10%, top 50%, bottom 10% and so on. Which can then be cross referenced against government as %ge of GDP? Or has this even been done?


Yep, poverty is shit, isn’t it?

Fanja Randriamihavo, 15, is one of 3,000 people who live and work in Ralalitra, one of Africa’s largest rubbish dumps. The site, in Madagascar’s capital, Antananarivo, spans about 50 acres. Each day, it receives more than 600 tonnes of waste from the capital and from the three million residents of its sprawling suburbs.

People who work on the dump site collect metals, coal and plastic from among the chaotic mess of needles, rats, faeces and aborted babies. They are paid just 3,000 Malagasy ariary ( 70p) a day.

As a side issue, it’s amazing how they become aborted babies when there’s shock horror to inculcate, mere blobs of tissue when we discuss abortion or not.

Still, yes, poverty is shite:

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

After all, global poverty is not something recently invented for the benefit of multinational corporations. Let’s turn the clock back to the Third World as it was only two decades ago (and still is, in many countries). In those days, although the rapid economic growth of a handful of small Asian nations had started to attract attention, developing countries like Indonesia or Bangladesh were still mainly what they had always been: exporters of raw materials, importers of manufactures. Inefficient manufacturing sectors served their domestic markets, sheltered behind import quotas, but generated few jobs. Meanwhile, population pressure pushed desperate peasants into cultivating ever more marginal land or seeking a livelihood in any way possible–such as homesteading on a mountain of garbage.

That is, we’ve a cure for this sort of absolute poverty. Neoliberal globalisation.

Please note that my proof comes from a left wing New York Times columnist (but I repeat myself) and Economics Nobel Laureate. This ain’t just ideological burblings, this is the real world cure for the ailment.

Better for what?

But the only thing that can truly shape a better capitalism is better representation of people in politics and the workplace: a recognition that the private sector isn’t inherently superior,

Forget the usual confusion between markets and capitalism there.

Better at what?

A screwdriver is inherently better than a hoe? Or not? Or perhaps each is the appropriate tool for a specific task?

Alex Hearn needs to learn some economics

While such a string of acquisitions certainly represents a massive inward flow of cash to Britain, it could have its downsides. If Britain’s most promising startups always pick guaranteed cash now, over the prospect of a much bigger payoff later, then the nation will never have its own tech giants to rival Apple, Google and Facebook.

The companies don’t belong to the nation. Further, the value to the “nation” is in being able to use the technologies, not in who owns them.

Seriously, we Britons are made poorer by Google’s existence?

It’s the same idiocy as the insistence that nations trade with each other. It’s simply not true.

So here’s a question on historical rates of pay

In the face of so many present-day problems, it’s all too easy to become wistful for a lost golden era of nationalised industry that brought secure jobs and forged strong communities. The low-paid jobs in call centres and distribution sheds, most located in bigger cities, that eventually arrived to replace the noise and filth of the pits were cleaner and safer, but they lacked the solidarity and support networks. Soon they, too, may disappear.

It is, of course, a lament for the vanished days of coal and steel jobs in South Wales.

But an interesting question, one to which I on’t know the answer. Were those jobs, by today’s standards, well paid? Are today’s call centre jobs, byt the standards of those days, badly paid?

Sure, obviously, I know, those jobs were relatively well paid at the time. One that sticks in the mind was that miners, mid-70s, were getting 200% of median wage. This was, as far as I can see, £50 a week for manual workers. OK, double that for miners and steel workers. Why not, we’re just guessing anyway.

Upgrade that for inflation. £800 a week from inflation only. £1,100 a week as the labour value of it.

If that’s correct then they would still be regarded as well paid jobs. But I think I might be overcooking those 1975 wage levels. So, anyone able to actually fin what wages were, in nominal terms, back then?

Polly is nostalgic for this

For some visitors the London exhibition will be nostalgic. There is a recreation of a chilly 70s front room with depressing news reports on the telly, candles for when the lights go out, a copy of Look-In, and a Peters and Lee record that someone hasn’t put back in its sleeve.

After all, the mid-70s is when we were most equal…..

Lordy be Larry, you forget your Marx

Blue Planet 2 demonstrated the terrifyingly fragile state of nature’s ecosystem. One of the key messages from the BBC series was that a delicate balance exists in the oceans between predators and prey. If there are too many predators, the stocks of prey fall. The predators go hungry and their numbers dwindle, allowing the prey to recover. Balance is restored.

Humans have their equivalent of this predator-prey model. It is best demonstrated by the workings of the labour market, where there is a constant struggle between employers and employees over the proceeds of growth. Unlike the world of nature, though, there is no self-righting mechanism. One side can carry on devouring its prey until the system breaks down. Over the past 40 years, employers have been the predators, workers the prey.

Even sodding Ol’ Karl got this right. Full employment is the cure. Only if there is a reserve army of the unemployed can the capitalists not pay their workers more as productivity rises. Without the reserve army then rising productivity means the capitalists are in competition for each other for that labour – wages rise therefore.

Really, we know the mechanism here.

And this isn’t even true:

Seen in the simplest terms, the story of political economy over the past four decades is a class war between capital and labour, which capital has won hands down. The battlefield is littered with evidence of labour’s defeat: nugatory pay awards, precarious work, the collapse of collective bargaining, and cuts in public spending.

And to the victors have gone the spoils: higher profits and dividends; lower personal tax rates; a higher share of national income.

The capital share is about the long term average. Risen from the 70s, sure, but not out of line at all. Taxes upon consumption and subsidies to production have risen (VAT largely) and mixed income has risen. Thus the labour share has fallen, but not the capital share risen.

This is simply incorrect.

There’s something about these numbers

The richest 0.1% of the world’s population have increased their combined wealth by as much as the poorest 50% – or 3.8 billion people – since 1980, according to a report detailing the widening gap between the very rich and poor.

The World Inequality Report, published on Thursday by French economist Thomas Piketty, warned that inequality had ballooned to “extreme levels” in some countries and said the problem would only get worse unless governments took coordinated action to increase taxes and prevent tax avoidance.

Not sure about this but. The 0.1% have more wealth than the bottom 50%. That’s a reasonably normal feature of wealth distributions by the way.

So, if the amount of the top .1% has risen by as much as that of the bottom 50% then the wealth gap must have fallen, no? Say, 25% (about what they do say) went to the tippy top people, 25% of the increase in wealth. The same also to the bottom 50%. Then the ratio between the two must have fallen.

Ain’t this a surprise?

Almost 100 million people are pushed into extreme poverty each year because of debts accrued through healthcare expenses.

A report, published by the World Health Organization and the World Bank on Wednesday, found the poorest and most vulnerable people are routinely forced to choose between healthcare and other necessities for their household, including food and education, subsisting on $1.90 (£1.40) a day.

Researchers found that more than 122 million people around the world are forced to live on $3.10 a day, the benchmark for “moderate poverty”, due to healthcare expenditure. Since 2000, this number has increased by 1.8 million a year.

Outrageous, don’t you think? People are budget constrained?

Poor people more so?

The things that will be revealed to us, eh?

Anyone pluck the logic out of this?

Turns out, data suggests that it’s not just people of color who would benefit financially from closing the racial wage gap in the United States: About $2 trillion in U.S. gross domestic product is lost because of race-based pay discrimination, research suggests.

Both “The Business Case for Racial Equality,” a report published by the W.K. Kellogg Foundation, and “The Equity Solution: Racial Inclusion Is Key to Growing a Strong New Economy,” a study published by PolicyLink, estimate that America’s GDP would increase by around $2 trillion annually — or by 14% — if the racial income gap were closed.

Just paying some section of the population higher wages increases GDP does it?

No, sadly, the analysis isn’t any more than that. It really is just “if blacks earned the same as whites then the economy would be.” Sigh.

Well, no, this isn’t quite how it works

One of the world’s biggest bitcoin exchanges has warned that its systems may collapse if there is a run on the digital currency, leaving investors unable to cash out their holdings.

Brian Armstrong, the chief executive of Coinbase, said fears of wild swings in the value had led the platform to restrict how much customers can sell — “to protect client accounts and assets”.

Restrictions on how much you can sell – on the world’s most liquid exchange and yes, it is, in terms of real liquidity of turning it into fiat cash – just supports the price, don’t they?

Important question here – is Willy Hutton right?

No, don’t go with the important and obvious answer – you fuckin’ kiddin’ me that Willy might have got something right?

Let us examine the contention:

We live in a world of corporate goliaths and the trend to gigantism is accelerating. The new era of hi-tech data capitalism has an embedded proclivity to monopoly. The bigger the network, whether Facebook or Google, the more valuable it is to be connected. Big is good in the digital universe, while even bigger is better.

Meanwhile, analogue capitalism, confronted by the challenge of the new, is reacting by consolidating and merging into ever larger entities. Unless they do, comes the reply to any challenge from national competition authorities, they won’t have the heft and scale to meet the new competition. Increasingly, we are surrounded by the most awesome concentration of corporate power in the history of capitalism.

Well, that’s an interesting thought. Do we actually have an increasing concentration in the economy? Say that Google’s turnover is $100 billion. Not far off at least. Global economy (for it is a global company) is $100 trillion, not far off. Google is 0.1% of the global economy therefore.

Is this more or less of a concentration than the past? I don’t know myself although I would think it unlikely. More or less than, say, Standard Oil? Less, I think I insist. For it’s half the turnover of Shell today. (Yes, I know, turnover isn’t quite the right measure here but this is very rough indeed).

Then there’s this:

Last week came another small milestone, in Britain. Hammerson, a property company few will have heard of, swooped on its rival, Intu, even less well known, in a £3.2bn bid. Yet the outcome will affect us all. Many major shopping malls – London’s Brent Cross, Birmingham’s Bullring, Manchester’s Trafford Park, Oxfordshire’s Bicester Village – will be owned by the same company. Hammerson will be the arbiter of how we shop: what stores are positioned where, in what mall and at what rent; it can even determine the restrictions on forms of permissible public activity in its private spaces.

That’s the value of the property/land. The ONS just reported that this is, in the UK, worth £5 trillion (can’t recall if that’s land only or land plus property upon it). 0.064% is evidence of an increased concentration?

Can’t see it really, can you?

In every industry, reported the Obama administration last year, the market power of the biggest companies has been growing and mark-ups and profit margins with them. America’s era of the robber barons in the late 19th century had nothing on this.

Anyone looked at retail just recently? With Amazon steaming in that’s not really how it’s working out, is it? And I really am pretty sure I reject the idea that margins are like those of the robber barons. Observers here (and The Observer) are being fooled by IP. More of the value of production is in that IP these days, making those gross margins look larger simply because of the way in which we account for IP. After cost of sales that is, as part of gross profits, instead of part of the cost of sales.

Hammerson will argue that it had no choice. So much shopping is online that the mall is looking increasingly like a late 20th-century phenomenon, outdated and outmoded. E-shopping is booming and, with the advent of virtual reality, you can go beyond browsing online to “handling” the goods you plan to buy. Hammerson’s only option is to buy up its competitors and try to hold the digital invaders at bay. You can see its point, but its monopolistic grip on the market will be such that it is better empowered to resist declines in rent and will take any opportunity to lift them. Our competition authorities stand idly by, helpless onlookers rather than proactive interveners.

And isn’t that sweet? His proof of increased concentration and market power is the increased competition being faced?


This is also entirely wrong:

Meanwhile, the digital invaders are getting bigger. One of the laws of economics, itself an analogue discipline teaching doctrines far removed from the realities of today’s markets, used to be that as companies grow they start to lose control of their capacity to be efficient and unit costs rise. This is called decreasing returns to scale. In this way, or so the theory went, we could trust a free market not to produce corporate goliaths because they become inefficient, the ideology that Brexiters so blindly believe. But one of the features of data capitalism is exactly the opposite: increasing returns to scale.

It’s not a law of economics that there are decreasing returns to scale. It’s an observation that returns to scale vary dependent upon scale. Sometimes they increase, sometimes they reduce, the correct answer being “it depends.” Sure there are network effects these days. But then so have there been in things like lorry repair. Those who have a network to repair lorries across the world (and the manufacturers do indeed run something very much better than the AA for their own lorries) can sell lorries into the long distance lorry market. Those that don’t cannot. Rolls Royce’s global jet engine repair network is the – yes *the* – major come on for buyers. Equally there have been diseconomies to scale – the cancerous mestastasizing of bureaucracy in large organisations for example. And as the gender wibble has shown at Google, the new firms aren’t immune to HR taking over now, are they?

“Profits as a share of GDP in advanced industrial economies are rising and”

We need proof of this Willy, proof. And it’s not something I’ve seen much of to be honest. The labour share has fallen, certainly, but it’s not necessarily true that that means an increasing profit share. In the US economy domestic profits are a percentage point or two around where they’ve long been, in the UK similarly after that 70’s slump. We really do nee proof of this contention before we accept it.

International trade is not a game of cricket between equally matched teams, only disturbed by Brussels Eurocrats, as Jacob Rees-Mogg, Boris Johnson et al imagine, waiting for a Britain, energised by leaving the EU, to further stimulate it. It is a dog-eat-dog world in which the choice for a medium-size country is to make common cause with one of the three economic blocs capable of challenging the new monopolists and cartels – China, the US or the EU – or roll over and be plundered. Britain alone has no chance of challenging the West Coast tech giants over their policies on anything from tax to data or challenge any of the analogue goliaths over their stance, say, on diesel emissions or plastic packaging.

We’ve always been at war with EastAsia, haven’t we?

This is an interesting contention

When Ted Heath signed up to the EEC, Britain was out of step with France, Germany, Holland and even Italy. The UK was a low-cost, low-wage economy when its neighbours operated behind high tariffs to protect high-cost, high-wage economies.

It’s not immediately obvious from Google whether this was true. Were British wages low compared to those other countries in the early 70s? I don’t in fat know but I don’t think it likely. So, where does the contention come from?

Then this is wondrous, isn’t it?

On the right it is favoured by free-market Brexiters like the economist Patrick Minford, who see the EU as a barrier to efforts at driving down the cost of living through access to cheap food (such as US chicken and beef), cheap energy and striking out almost every rule that protects workers’ rights.

Such a bastard, eh? Trying to raise real wages by reducing the costs of the things people buy.

Because it’s a declining industry

Rosmann, an Iowa farmer, is a psychologist and one of the nation’s leading farmer behavioral health experts. He often answers phone calls from those in crisis. And for 40 years, he has worked to understand why farmers take their lives at such alarming rates – currently, higher rates than any other occupation in the United States.

That industries decline in importance is simply a truth about our universe. As productivity rises we need fewer people to perform that task. Thus some of them must leave said production. We’re simply not going to get the world getting richer without this happening.

This doesn’t mean that it’s easy of course. People tend not to change their lives until forced to do so. And that forcing will indeed often enough include a great deal of economic pain.

There is no specific solution to this. There’s a general one, sure. The process of transition from one mode of life to another could be made easier. I’ve a great affinity for the Danish view of these things. Good unemployment pay, good training opportunities. Losing a job really isn’t all that much of a stress or a strain. Obviously, losing a business will still be stressful but it’s still not an economic wipe out.

The other part of the system is that after some period of time (maybe 2 years for Denmark?) support ceases to near nothing. Labour is made liquid – not perhaps le mot juste as it’s a bit close to Soylent – which is economically efficient. The Danish unions simply don’t whine and strike and obstruct about job losses as a result.

There’s thus a general solution available, a support net for those who must transition. But there isn’t a specific one for farmers nor any other particular industry or line of work. Simply because we do want sectors where productivity is rising fast to have fewer people doing the stuff, assuming that there’s a limit to the demand or the actual product itself. That’s rather what economic advance is.

Worstall’s Fallacy in the wild

America’s homeless population has risen this year for the first time since the Great Recession, propelled by the housing crisis afflicting the west coast, according to a new federal study.

The study has found that 553,742 people were homeless on a single night this year, a 0.7% increase over last year.

No, really, no.

The bottom 10% of the US does about as well as the bottom 10% of certain generous European welfare states. The bottom 5% does rather worse (20 to 30% perhaps). Yes ,this is a reflection of that US welfare state, for that’s going to be a major determinant of the living standards of those at the bottom. And as it happens single able bodied people get very little help indeed. Well, you know, their gaff, their rules. They do very much better in pulling up children above their own rather different idea of a poverty line. Shrug.


The government mandates that cities and regions perform a homeless street count every two years, when volunteers fan out everywhere from frozen parks in Anchorage to palm-lined streets in Beverly Hills and enumerate people by hand. Those numbers are combined with the total staying in shelters and temporary housing.

What this is is a measure of those who would be without shelter if it were not for what that welfare state does to reduce the number of people without shelter. Which is Worstall’s Fallacy of course. In deciding what we should be doing we must look at the effects of what we’re already doing – so that we can decide if we should be doing more, doing something different. What we should not be doing is measuring the original size of the problem then deciding that more must be done – without evaluating the effects of what we already do.

As it happens I think the US could and should be doing rather more. Like, abolish very large parts of the zoning laws so that it’s possible to build cheap housing. But that’s still different from the facts about these numbers being presented.